U.S. Chamber of Commerce advises Ontario not to break contract with The Beer Store
A newly opened self serve Beer store in Kingston, Ont., on March 16, 2016. THE CANADIAN PRESS IMAGES/Lars Hagberg
TORONTO -- A large business advocacy group in the United States is criticizing Ontario's move to break a contract with the Beer Store, saying it sends a "negative signal" to international businesses and investors.
The U.S. Chamber of Commerce delivered its message to Premier Doug Ford in a letter this week, urging him to not to rip up the 10-year deal in an attempt to put beer and wine in corner stores.
"Our strong concern is that terminating an existing contract, and doing so without compensation ... risks sending a negative signal to U.S. and other international investors about the business and investment climate in Ontario," wrote Neil Herrington, vice president of the organization that represents more than three million businesses.
The Progressive Conservatives tabled legislation last week that would terminate a contract with The Beer Store that was signed by the previous Liberal government. The deal permitted an expansion of beer and wine sales to hundreds of grocery stores but the Tories have criticized it as an agreement that stifles competition.
The new legislation -- which contains provisions to nullify any financial penalties associated with breaking the deal -- is expected to pass final reading this week.
Herrington said by ripping up the agreement, the government risks undermining its own message that Ontario is "open for business."
"The U.S. Chamber ... believes there are few factors more critical to investment and economic growth than the legal certainty and predictability fostered by the respect for the rule of law," he said.
Finance Minister Vic Fedeli defended the move to tear up the deal, saying all governments have the right to dispose of bad contracts signed by previous administrations.
"(The companies) know that in our parliamentary system we have the opportunity to change a bad deal if a bad deal was made," he said. "Keeping this bad deal for six more years does not help the people of Ontario."
The Beer Store has said it plans to fight the legislation through the courts. The alcohol retailer and its union have also warned of steep financial penalties that could result from ending the deal.
NDP Leader Andrea Horwath said the U.S. Chamber of Commerce is right to speak out against the move because Ontario has signalled that it's no longer a "safe bet" for investors.
"The bottom line is people want to see investment in Ontario," she said. "We're not going to get that if the climate is such that businesses are worried that contracts with the government aren't worth the paper that they're written on."
Earlier this week, Ontario's Chamber of Commerce also spoke out against the plan to rip up the contract. Its president and CEO said cancelling the deal sends an alarming message to the business community in Ontario and beyond.
The Ford government has come under fire in the U.S. in the past. Washington state regulators said late last year that they wouldn't allow utility Hydro One to buy American energy company Avista for fear the Ontario government, which owns 47 per cent of Hydro One's shares, might meddle in Avista's operations.